Gold fell for a fifth session on Monday, its longest losing streak in seven months, as rising stock markets diverted interest from bullion, and ahead of the latest European Central Bank policy meeting and key U.S. data this week.

Prices have fallen sharply after breaking through $1,285 an ounce on Tuesday, the lower limit of a range they had kept to for much of the previous month. They hit a low of $1,240.69 an ounce earlier on Monday, their weakest since late January.

Spot gold was down 0.3 percent at $1,247.10 an ounce at 1127 GMT, while U.S. gold futures for August delivery were up $1.00 an ounce at $1,247.00.

The ECB is tipped to announce a package of policy options after its meeting on Thursday, following heavy hints that monetary policy will be loosened in a variety of ways to support growth.

The following day sees the release of monthly U.S. non-farm payrolls data, a leading barometer of the health of the world's largest economy. Both events will be closely watched by gold traders for their impact on currencies and U.S. monetary policy.

"There are two forces in control - fast money pulling prices lower, and the market looking to price in a more dovish ECB and a strong non-farm payrolls number," Societe Generale analyst Robin Bhar said. "If the ECB goes through with its measures and U.S. data is consensus beating, I still think it's doom and gloom for gold."

Looser monetary policy, which cuts the opportunity cost of holding non-yielding gold, is generally positive for bullion prices. However, this will likely be outweighed by the currency impact of a weaker euro, Bhar said.

"A more dovish ECB might be bullish for gold in euros, but people still look at gold in dollars," he added. "If the dollar continues to be bid... it can only apply more pressure on gold."

Reassuring Chinese factory data and another record high for Wall Street lifted world stocks on Monday, diverting interest from gold. European shares started the month positively, rising 0.2 percent.

PHYSICAL DEMAND SOFT

Physical buying failed to pick up as consumers expect gold prices to fall even further. In top buyer China, banks are also adequately stocked from last year's record imports, leaving them to focus on selling existing stocks first.

"On the physical side, the trade remained largely anaemic, with few changes to near flat Shanghai Gold Exchange premiums to (spot prices) last month," VTB Capital said in a